Rose Valley financial scandal

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Rose Valley Group
Founded1997
FounderKajal Kundu
Years active1997–2015
TerritoryIndia (West Bengal, Odisha, Assam, Tripura, Jharkhand, and others)
EthnicityIndian
Leader(s)Gautam Kundu (Chairman)
Criminal activitiesPonzi scheme, financial fraud, money laundering

The Rose Valley financial scandal, also referred to as the Rose Valley chit fund scam, is a substantial financial fraud case and alleged political scandal that emerged in India during the early 2010s. The controversy centers around the Rose Valley Group, a conglomerate accused of operating unauthorized collective investment schemes and Ponzi schemes, extracting over ₹15,000 crore from millions of depositors predominantly across eastern India.[1]

Origins and Operations

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The inception of the Rose Valley Group dates back to 1997, when Kajal Kundu, a former Life Insurance Corporation insurance salesman with extensive experience, founded Rose Resorts and Plantations in Tripura. Initially, the company focused on collective investment schemes linked to rose plantations, inviting investors to finance agricultural projects in return for promised dividends. However, this venture faced early regulatory challenges when, in 1999, the company sought formal approval from the Securities and Exchange Board of India (SEBI) but was denied due to non-compliance with regulatory requirements. Despite this setback, operations continued without authorization until a tragic incident in 2003, when Kajal Kundu's vehicle plunged into a lake while en route from Agartala to Guwahati, resulting in the deaths of him, his wife, and son. This event marked a significant turning point, with control shifting to his brother, Gautam Kundu, who would reshape the modest company into a sprawling financial entity marked by dubious practices.

Under Gautam Kundu's leadership, the company was revitalized through the launch of the "Ashirvad" scheme, which became a fundamental part of Rose Valley's growth. This scheme, marketed as a real estate investment opportunity, allowed investors to deposit funds as booking amounts for land parcels. Upon maturity, investors had the option to either take possession of the allotted land or receive their principal back along with extraordinarily high interest rates, ranging from 11.96% to 17.65%—far exceeding typical bank rates. This model appealed to many low-income investors in eastern India, who were often unaware of the complicated terms but were drawn in by the tantalizing returns. Kundu strategically expanded the business from Tripura to other states, including West Bengal, Odisha, and Assam, setting up regional offices that acted as collection hubs staffed by aggressive agents earning large commissions.

Between 2005 and 2011, the company experienced rapid financial growth that caught the attention of regulators. Starting with modest collections of ₹3.75 crore during 2005-2006, deposits soared to ₹1,271.98 crore by 2009-2010. This explosive growth led the Economic Offences Investigation Cell, under the Left Front government, to formally alert SEBI on December 7, 2009, prompting a request for an investigation into the group's operations. However, despite this warning, collections continued to rise, reaching ₹2,016.32 crore by March 31, 2011—just as the political landscape shifted with the rise of the Trinamool Congress in West Bengal. It was during this peak in January 2011 that SEBI finally prohibited Rose Valley Real Estate and Construction Limited from raising more funds, although by that point, Kundu had already diversified into various sectors.

Gautam Kundu's business expansion followed a notable pattern of using depositor funds to establish seemingly legitimate enterprises. In the hospitality sector, he opened one of Bengal's largest hotels at Mandarmani beach and subsequently acquired several properties, including the Chrome Hotel in Kolkata, and establishments in Durgapur, Siliguri, and other locations. These properties became integral to another fraudulent scheme launched in 2011—the Holiday Membership Plan operated through Rose Valley Hotels and Entertainment Ltd. Investors in this scheme paid monthly fees for supposed vacation accommodations or were promised the return of their principal plus interest (up to 17.65%) at maturity. SEBI would later identify about 21.9 lakh investors involved in this plan before it was terminated in 2013.

Simultaneously, Kundu launched Rose Valley Media and Entertainment Limited in 2009, aiming for a robust presence in television, radio, and cable networks. This media empire expanded to include various channels such as the entertainment channel Ruposhi Bangla and news channels like News Time (Bengal) and Odisha Time. Kundu also made significant investments in sports entertainment by becoming the main sponsor of the Kolkata Knight Riders in the Indian Premier League. Through Rose Valley Films, he emerged as a key player in Bengali cinema, investing nearly ₹10 crore annually in widely acclaimed films, which garnered respect in the industry for its artist-friendly payment practices and non-intrusive approach to creative decisions.

Throughout this diversification, Gautam Kundu crafted an image of lavish success, owning a Rolls-Royce and a collection of luxury vehicles. However, investigations by SEBI consistently indicated that these ostensibly legitimate business activities were financed entirely by illegal deposit schemes. The regulator repeatedly classified Rose Valley’s operations as unregistered collective investment schemes that posed significant risks to investors, highlighting that the company never secured necessary registration from the Reserve Bank of India for its financial activities. Despite facing multiple prohibitory orders beginning in 2011, the group managed to operate continuously by creating new companies and schemes, exploiting regulatory loopholes and leveraging political connections until its eventual collapse in 2015.[2]

Regulatory evasion and public panic

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Following the Saradha scandal in 2013, SEBI identified Rose Valley as part of a larger pattern of financial fraud in eastern India, with its estimated ₹4,000 crore deposits dwarfing Saradha's ₹1,200 crore operations.[3] When panicked depositors queued at Rose Valley branches to withdraw funds after Saradha's collapse, the company issued IOUs (coupons and token slips) instead of cash repayments.[4] Despite SEBI's 2011 restraining order, the group used legal delays to continue operations, with its real estate arm collecting ₹1,270 crore and its hotels division amassing ₹2,900 crore before being shut down in Jharkhand.[5] In April 2013, SEBI imposed a ₹1 crore penalty and filed an FIR against company officials.


Investigation

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The situation intensified in 2015 when the Enforcement Directorate (ED) detained Gautam Kundu under the Prevention of Money Laundering Act, alleging he orchestrated one of India's most extensive Ponzi scams. Investigators discovered the group maintained over 3,000 bank accounts and possessed assets distributed across 12 Indian states.[6] Estimates of the total fraud suggested it exceeded ₹15,400 crore.[7] In 2024, the ED filed a supplementary charge sheet that implicated Subhra Kundu—the wife of Gautam Kundu—among other accused individuals.[8]

2013 Enforcement Directorate raids

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In April 2013, the Enforcement Directorate (ED) conducted surprise inspections at Rose Valley offices in Salt Lake, Baguiati, and Barasat, Kolkata, seizing financial records and documents. Investigators alleged the group illegally collected public deposits while violating SEBI regulations and diverted funds into hotels, media, spices, and real estate ventures.[9] These raids occurred amid parallel actions by the Odisha government, which had filed cases against Rose Valley and 42 other deposit-taking firms for financial fraud. Chairman Gautam Kundu claimed full cooperation, stating: "We operate within legal boundaries and aim to repay investors," while employees feared operational shutdowns akin to the Saradha Group's collapse.[9]

2025 Calcutta High Court Ruling

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In a significant legal setback on August 17, 2025, the Calcutta High Court dismissed Rose Valley Real Estate and Construction Company's petition challenging SEBI's regulatory authority over deposit-mobilizing firms. The company had contested Sections 11AA and 12 of the SEBI Act, which empower the regulator to compel registration of collective investment schemes and take enforcement action against violations. Justice Dipankar Dutta upheld the validity of these sections, stating they were "valid and in accordance with the law," while imposing ₹10 lakh costs on the petitioner payable to the court registrar. This ruling followed SEBI's earlier August 2025 order shutting down Rose Valley's holiday membership plan and directing refunds to depositors. The company announced plans to appeal the single-bench judgment before a division bench.[10]

Asset Seizures and Restitution

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The ED took significant action in 2018 by seizing assets worth over ₹4,200 crore, which included various properties such as hotels, land, luxury vehicles, and other valuable assets. Following judicial approval from a special PMLA court, the ED successfully facilitated the restitution of ₹19.40 crore to defrauded investors in August 2024.[11]

In October 2024, the Indian government commenced a large restitution program, distributing ₹515 crore to approximately 7.5 lakh victims of the scam.[12][13] Further disbursements included ₹5 crore to 7,346 victims[14] and ₹100.5 crore to another group of affected individuals.[15] By March 2025, the ED reported securing ₹450 crore designated for future restitution efforts.[16] Additionally, the ED initiated the auctioning of properties located in Tripura to fund restitution initiatives.[17]

Political involvement

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The Rose Valley chit fund scam had significant political ramifications, particularly for the All India Trinamool Congress. Several leaders of the party faced questioning and arrest due to their alleged links to the group.

2013 regulatory warnings

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SEBI had warned the West Bengal government for over a year about fraudulent chit funds through official communications and public newspaper campaigns.[18] Chief Minister Mamata Banerjee acknowledged receiving a SEBI letter about "a chit fund" two months prior but avoided naming Rose Valley specifically,[19] even as her government established a ₹500 crore relief fund for Saradha victims while taking no comparable action for Rose Valley depositors.

Sudip Bandyopadhyay

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In January 2017, Trinamool Congress MP Sudip Bandyopadhyay was arrested by the Central Bureau of Investigation (CBI) for allegedly promoting Rose Valley schemes and benefiting financially.[20]

Tapas Paul

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Actor and Trinamool MP Tapas Paul was also implicated in the scam, serving as a director in Rose Valley's media wing, and was arrested in relation to the alleged misconduct.[21][22]

Sadhan Pande and family

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In 2016, the Enforcement Directorate (ED) uncovered transactions showing that Shrreya Pande, daughter of the late Trinamool MLA and Minister of State for Consumer Affairs Sadhan Pande, had received nearly ₹2 crore from Rose Valley Group for alleged interior design work at their Kolkata and Mandarmani properties. Shrreya, a socialite with film and modeling experience, claimed these were legitimate professional fees, though she acknowledged outstanding dues of ₹25 lakh from the company.

Despite asserting she was hired based on her experience with clients like the Tata Group and the Reserve Bank of India, ED officials raised questions about the lack of formal interior design training and the process through which she was selected. She initially avoided personal appearances before the ED, sending her legal representatives with documentation instead. Shrreya maintained that she was being targeted due to her political lineage. At the time, Sadhan Pande refused to comment, becoming the second TMC minister after Tapas Paul to be drawn into the Rose Valley investigation.

In 2024, the CBI named Shrreya as the prime accused in a fresh chargesheet, alleging Rose Valley routed funds to her companies and financed her China tour.[23]

2017 political fallout

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The arrests of Bandyopadhyay and Paul in January 2017 triggered intense political conflict in West Bengal. Chief Minister Mamata Banerjee condemned the arrests as a "political vendetta" by the central government. She called for mass protests and questioned why leaders from the BJP, specifically Narendra Modi and Amit Shah, were not subjected to similar scrutiny in light of the scam.> In response, Banerjee convened an emergency meeting with TMC MPs and party leaders demonstrated at the CBI office in support of Bandyopadhyay, with West Bengal minister Firhad Hakim among them.

The reactions split along party lines. Leaders from the BJP, such as Dilip Ghosh, welcomed the arrests, suggesting that more were imminent, while Sidharth Nath Singh cited the "ongoing violence in Bengal" as a concern. CPI(M) MP Md Salim noted Bandyopadhyay's "swift fall from prominence." Meanwhile, the Indian National Congress rallied behind the TMC, with spokesperson Randeep Singh Surjewala accusing Modi of "vendetta politics" and raising questions about why central minister Babul Supriyo had not been arrested despite being named in the scam. Additionally, senior Congress leader Ahmed Patel contacted Banerjee to express his solidarity during the crisis.

Amid the political upheaval, Bandyopadhyay's wife, who is a TMC MLA, refrained from making public comments, stating that the party would manage the situation.The events underline the intricate connections between politics and crime in West Bengal and reflect the ongoing tensions within the state's political environment.

Role of the Film Industry

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The case of producer Shrikant Mohta, co-founder of SVF Entertainment, who was arrested by the Central Bureau of Investigation (CBI) in January 2019, serves as a crucial turning point for the film industry in Bengal. Mohta was implicated in an alleged ₹24 crore fraud involving Rose Valley's Brand Value Communication through questionable film distribution agreements. This incident highlighted deep-seated issues within the industry, revealing that approximately 30% of Tollywood's investments were controlled by chit fund companies through about 35 registered producers.[24] The Rose Valley scandal, which investigators estimated to be worth ₹17,520 crore, significantly influenced Bengal's film economy, illustrating the need for more robust regulatory frameworks to safeguard creative industries against corruption.[25]

Mohta's arrest was marked by dramatic events at his Kolkata office, reflecting the complexity and challenges faced by law enforcement in addressing such entrenched issues. The CBI's inquiry revealed inconsistencies in Mohta's testimony regarding a 2010 agreement, drawing attention to the importance of transparency in all business dealings within the film sector.[26] Investigators also seized 20 artworks allegedly acquired with misappropriated funds, underscoring the need for oversight mechanisms in financial transactions within the industry.[26]

From 2009 to 2014, Rose Valley's investment of over ₹100 crore in Tollywood financed more than 40 films, showcasing the potential for positive contributions to the film industry. However, this involvement was marred by allegations of money laundering, with production costs being artificially reported at a fraction of their true value, as evidenced by the film Hangover being recorded on paper for just ₹5 lakh. This situation emphasizes the need for clarity and accuracy in financial reporting to maintain trust within the industry.[27] Cross-investment strategies among 27 group companies exacerbated financial obscurity, prompting discussions about better governance practices to maintain integrity in film financing. BJP leader Rahul Sinha remarked, "There is no better place than the film industry to invest black money... using stars to earn people's trust," highlighting the essential role of reputation in financial dealings.[24]

As investigations continued, the Enforcement Directorate (ED) summoned various prominent industry figures in July 2019 to clarify financial activities. Actor Rituparna Sengupta was questioned for several hours regarding payments made to her production house Bhavana Aaj O Kaal, reinforcing the need for diligence and accountability in the financial engagements of industry professionals.[28] Investigators suggested that some funds were misallocated, complicating matters and underlining the importance of ethical standards in financing and production. Similarly, actor Prosenjit Chatterjee was summoned regarding ₹2.75 crore his company received during its affiliation with Rose Valley, showcasing the interconnectedness of financial transactions in the industry.[27] The inquiries also extended to notable figures such as actor-politician Tapas Paul and TMC MP Sudip Bandyopadhyay[24]—highlighting how widespread the impact of financial misconduct can be.

The aftermath of the SEBI's 2013 order for Rose Valley to repay investors, along with Kundu's 2015 arrest, stirred significant changes in the industry. Monthly film releases fell from an average of 10 to just 3 by 2016, with Brand Value Communications canceling projects valued at ₹500 crore.[24] This decline in production highlights the need for a revitalized approach to financing and creativity within Tollywood. Average film budgets were reported to shrink significantly from ₹4-5 crore to "₹1 crore or less," according to assistant director Bijoy Majhi, which has posed challenges for technicians and crew.[29] East India Motion Pictures Association's VP, Krishna Daga, noted that the retreat of chit funds due to outstanding dues severely impacted filmmaking interests, resulting in a livelihood crisis for over 10,000 technicians. This crisis emphasizes the necessity for innovative models of funding and support systems to ensure the film industry's sustainability going forward.[29]

In restitution efforts, the ED auctioned Rose Valley properties to compensate victims, returning ₹515 crore to 7.5 lakh affected investors by October 2024,[30] with an additional ₹2.29 crore disbursed to 3,741 victims in February 2025.[31] Recent developments included Rituparna Sengupta's 2024 summons concerning a ration distribution scam, though she delayed appearance citing overseas commitments before eventually complying with ED questioning.[32]

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The Rose Valley Group operated through an array of subsidiaries and associated companies, many of which were subsequently identified as shell companies. By 2013, the Indian government had initiated investigations into over 150 companies for financial irregularities, including numerous entities affiliated with Rose Valley.[33]

See Also

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References

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  1. ^ "Rose Valley scam: All you need to know about the chit fund case". Business Today. 4 February 2019.
  2. ^ "Rise and rise of Gautam Kundu". The Telegraph. 26 March 2015.
  3. ^ "Saradha scam tip of iceberg, SEBI probing 5 companies including Rose Valley". NDTV. 26 April 2013.
  4. ^ "Chit fund collapse: Rose Valley investors stare at losses". Business Standard. 1 May 2013.
  5. ^ "Sebi slaps Rs 1 cr fine on Rose Valley, its directors". The Economic Times. 23 April 2013.
  6. ^ "Rose Valley chairman Gautam Kundu arrested by ED". The Economic Times. 26 March 2015.
  7. ^ "Rose Valley Group's CMD Gautam Kundu has 150 cars, 3,078 bank accounts and more: ED". The Economic Times. 15 July 2015.
  8. ^ "ED files supplementary charge sheet in Rose Valley chit scam case". Hindustan Times. 2024.
  9. ^ a b "ED raids Rose Valley offices in Kolkata, chairman claims innocence". OneIndia (in Bengali). 30 April 2013.
  10. ^ "Blow to Rose Valley in SEBI cases". The Telegraph. 17 August 2025.
  11. ^ "Rose Valley Group Ponzi scheme: ED facilitates restitution of Rs 19.40 cr to defrauded investors". The Economic Times. 30 August 2024.
  12. ^ "Govt begins restitution in Rose Valley scam". NewsOnAir. October 2024.
  13. ^ "Press Information Bureau release". PIB. 2024.
  14. ^ "Rose Valley chit fund scam: Restitution process of Rs 5 crore begins". India Today. 5 October 2024.
  15. ^ "Rose Valley victims get another Rs 100.5 crore". The Sentinel. October 2024.
  16. ^ "ED secures Rs 450 crore for Rose Valley victims". India Today. 14 March 2025.
  17. ^ "Chit fund scam: Auction of properties begins". Tripura Times. 2024.
  18. ^ "SEBI warned Bengal govt about chit funds a year ago". The Financial Express. 27 April 2013.
  19. ^ "Mamata admits receiving SEBI letter on chit funds, but mum on Rose Valley". The Hindu. 27 April 2013.
  20. ^ "Rose Valley chit fund scam: TMC MP Sudip Bandyopadhyay gets bail". The Indian Express. 20 May 2017.
  21. ^ "Rose Valley road to minister daughter". The Telegraph. 9 December 2014.
  22. ^ "Trinamool MP Tapas Paul arrested in Rose Valley chit fund scam". Hindustan Times. 30 December 2016.
  23. ^ Bangla, TV9 (2024-04-25). "Rose Valley: রোজভ্যালির টাকায় চিন ঘুরেছেন, CBI চার্জশিটে এক নম্বর অভিযুক্ত হিসাবে নাম সাধন কন্যা শ্রেয়ার". TV9 Bangla (in Bengali). Retrieved 2025-08-14.{{cite web}}: CS1 maint: numeric names: authors list (link)
  24. ^ a b c d "ED summons Bengali superstar Prosenjit Chatterjee: How Rose Valley scam pushed Tollywood onto a thorny path". Firstpost. 10 July 2019.
  25. ^ "Rose Valley Scam Case: Rituparna Sengupta, Prosenjit Chatterjee summoned". NDTV. 11 July 2019.
  26. ^ a b "Film producer Shrikant Mohta held by CBI in Rose Valley case". The Times of India. 25 January 2019.
  27. ^ a b "Rose Valley scam: Bengali superstar Prosenjit Chatterjee summoned by ED". India Today. 9 July 2019.
  28. ^ "ED questions Rituparna Sengupta; claims her firm was paid Rs 7.5 crore". Millennium Post. 19 July 2019.
  29. ^ a b "Rose Valley effect: Tollywood budgets shrink". The Hindu. August 2016.
  30. ^ "Rose Valley financial scandal". Wikipedia. Retrieved 14 August 2025.
  31. ^ "ED restitutes ₹2.29 crore to defrauded investors of Rose Valley Group". The Hindu. 28 February 2025.
  32. ^ "Ration scam: ED summons Bengali actress to appear on June 5". The Hindu. 30 May 2024.
  33. ^ "Probing 154 companies for financial frauds: Pilot". Business Standard. 5 August 2013.
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